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patio11's profile
Patrick McKenzie
Patrick McKenzie
Patrick McKenzie
@patio11

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Patrick McKenzie

@patio11

I work for the Internet, at @stripe, mostly on accelerating startups. Opinions here are my own.

東京都 Tokyo
kalzumeus.com
Joined February 2009

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    1. Patrick McKenzie‏ @patio11 Jan 30
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      I think it is underappreciated by many technologists how many technology companies are, often quietly, building vehicles which have cash flow profiles similar to asset backed securities. The economy structurally wants those assets and capita for them is extremely abundant.

      10 replies 19 retweets 195 likes
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    2. Patrick McKenzie‏ @patio11 Jan 30
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      This isn’t a good thing or a bad thing by itself. (Securitization got an extremely bum rap after the global financial crisis, mostly not for good reasons.)

      4 replies 1 retweet 24 likes
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    3. Patrick McKenzie‏ @patio11 Jan 30
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      The opportunity is twofold: one, there is some underlying customer need for a transaction that cannot be facilitated economically in the status quo. Two, there exist enormous pools of capital which are return-sensitive and need an option in a low-interest environment.

      1 reply 0 retweets 22 likes
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    4. Patrick McKenzie‏ @patio11 Jan 30
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      “Can you give me an example?” Socially awkward, sorry, but you should look at basically any business model where there is a high initial expense and then a consistent stream of payments afterwards and think “Ahh tech companies don’t want that on their balance sheet.”

      2 replies 0 retweets 32 likes
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      Patrick McKenzie‏ @patio11 Jan 30
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      SaaS companies have approximately this dynamic but largely don’t securitize yet, because equity funding is so abundantly available for SaaS, but I will eat my hat if there are not billions of SaaS-cash flow backed securities issued by 2030. Probably closer to 2025.

      8:42 PM - 30 Jan 2020
      • 7 Retweets
      • 128 Likes
      • Rollbar Dan Elitzer Benjamin Crane Nathan David Sacks Simon Vans-Colina Malinga Fernando Brandon Torres Declet cliqq.app
      9 replies 7 retweets 128 likes
        1. Matt Wensing  🐙‏ @mattwensing Jan 30
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          Replying to @patio11

          *adds to Summit pitch deck*

          0 replies 0 retweets 7 likes
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        1. Michael F. Martin‏ @riemannzeta Jan 30
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          Replying to @patio11

          Why would they securitize part of their business when they could just issue bonds? I believe you're right about more debt offerings, but it's hard to securitize service contracts.

          0 replies 0 retweets 2 likes
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        2. Kyle Jung‏ @kjthoughts1 Jan 30
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          Replying to @patio11

          There wouldn’t be a reason to securitize saas cash flows, they can just issue debt at a relatively low interest rate and pass the incremental return to equity holders. Borrow at 5%, return 15%. 10% incremental return to shareholders

          2 replies 0 retweets 1 like
        3. wily mandala‏ @babarganesh Jan 30
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          Replying to @kjthoughts1 @patio11

          The only reason would be if they were providing business financing to the people who were using their software as a service. For instance maybe a franchise model where the franchise owner needs financing to ramp up and rents the software and also pays back the 1/2

          1 reply 0 retweets 0 likes
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        1. EJ Campbell‏ @ejc3 Jan 30
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          Replying to @patio11

          Is the thesis, the asset backed securities will undercut the traditional VC model when it comes to access to capital?

          0 replies 0 retweets 1 like
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        1. Bhavik Chinai‏ @BhavikChinai Jan 31
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          Replying to @patio11

          Traditional invoice discounting by banks for reliable customers activates this even today. Raising >$ than contracted cash flow through securitization is crowdfunding in other words.

          0 replies 0 retweets 1 like
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        2.  🌳 Drew  🌳 Graham  🌳‏ @drewrants Feb 8
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          Replying to @patio11

          @threadreaderapp unroll

          1 reply 0 retweets 1 like
        3. Thread Reader App‏ @threadreaderapp Feb 8
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          Replying to @drewrants

          Hello, the unroll you asked for: Thread by @patio11: I think it is underappreciated by many technologists how many technology companies are, often… https://threadreaderapp.com/thread/1223102363403112450.html …. Share this if you think it's interesting. 🤖

          0 replies 0 retweets 0 likes
        4. End of conversation
        1. Edward Vielmetti‏ @vielmetti Jan 30
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          Replying to @patio11

          And we know what happened to the mortgage-backed securities market!

          0 replies 0 retweets 0 likes
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        1. Dianna Geairn‏ @DiannaGeairn Feb 9
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          Replying to @patio11

          Amazing

          0 replies 0 retweets 0 likes
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